Would you
bet against the Euro this year? Think again. it could be like standing in front of a train. Yes the German production data was a bit of a shake of the head but looking across to US markets it would be easier to imagine European growth from an undervalued economy than the US economy to reach further heights. Last Friday’s positive US NFP data
was a correction overdue yes, as the EUR/USD halted it’s march that started in
April. But with many hedge funds seeing trouble ahead for the US economy the
bets are back on for a push to the 1.30 mark by the end of this year. How many more US jobs can you add? The signs are still on for EUR/USD as a growth value currency for 2017. Why is
this happening? A/ The political risks of Grexit and Frexit and Brexit have vanished and
the call to European unity is working B/ The Euro economy is in a lot better shape
except for the banking sector C/ Central banks have diminished holdings of Euro
and will need to plough back into the value currency of the year. Strong
support lies at 1.1728 (04/08/2017 high) and once the weaker longs have been
shaken out we are looking for a resumption of growth and a target of 1.1910
(02/08/2017 high).
Cable
GBP/USD is at mischief and more to do with uncertainty and Brexit with the
spate of ugly airport scenes as a foretaste of future economic chaos driving
investors into a panic over Sterling stability. All eyes on the UK inflation
report. GBP/ USD was marching nicely in the trail of EUR/USD but the correction
has been deeper and now support is given at 1.2933 (20/07/2017 low but a test
of this can come today and tepid inflation data could break the support.
In US markets crude stockpiles have declined by
7.84 million barrels according to the American
Petroleum Institute but traders
are wary as the summer draws come to an end and the EIA is forecasting a
large US output thereafter. WTI did his $50 last week but quickly retreated
with a glut in view over the horizon. Be wary of $50 crude as the market
threatens to weaken.
